Cultivating partnerships with startups and entrepreneurs is a priority for any telco determined not to be sidelined in the digital future. Yet with their stodgy reputations and buttoned-down corporate practices, many operators are not recognized for their ability to attract and work alongside young talent.
Germany's Deutsche Telekom AG (NYSE: DT) is determined to prove it does not fall into that category through a new incubation program with Cisco Systems Inc. (Nasdaq: CSCO) and Intel Corp. (Nasdaq: INTC). Unveiled in July 2015 under the "Challenge Up!" banner, the initiative provided mentoring and support to a group of 12 startups -- picked from among hundreds of applicants -- working on Internet of Things (IoT) products and services. When it wrapped up earlier this month, the operator was quick to commit itself to the program for another year.
IoT growth expectations give Deutsche Telekom an obvious incentive to reach out to IoT boffins. The operator's T-Systems International GmbH IT unit is already developing IoT services for organizations in the automotive, energy and healthcare sectors, although it has admitted it will miss original expectations for such "intelligent network solutions" this year. Deutsche Telekom also has high hopes for Qivicon, a platform supporting various smart-home services, but needs to attract more technology partners to make it fly. (See T-Systems Looks to Restructuring for Recovery, DT in Smart Home Deal With Major Euro Telco and DT to Bring Smart Home Into Netherlands, UK.)
Growth Areas: Performance and Original Targets (€B)
Source: Deutsche Telekom.
Senic, one of the Challenge Up! startups, looks set to be among them. The German company has produced a wireless device called Nuimo that allows users to control a number of household appliances, including lighting, room temperature and music systems. "Senic will be integrated in Qivicon," says Elias Drakopoulos, Deutsche Telekom's senior vice president for European B2B.
Drakopoulos is equally keen to see technologies developed by other Challenge Up! participants included in the operator's business offerings. "The focus of Deutsche Telekom's Europe B2B area is on solutions and applications that will help our business customers to take the first step into digitalization," he says. "Many of this year's winners, including… ProGlove and Waylay, do just that."
Pointing the Way Forward
Deutsche Telekom's Elias Drakopoulos believes IoT startups could help the operator
drive sales of enterprise offerings.
ProGlove's smart glove is designed to help workers in the logistics and manufacturing industries perform more efficiently, while Waylay's automation system is aimed at businesses that want to integrate IoT with IT systems and online services. Both play to Germany's "Industrie 4.0" efforts to bring digitalization into the workplace and on to the factory floor.
That broader initiative, the importance of Germany's manufacturing industry to Europe's economy and the absence of a European Google or Facebook all help to explain why the region's startups might turn to Deutsche Telekom for support. But there is no indication Deutsche Telekom is perceived to be a second-best option, according to Drakopoulos. "We have not had difficulties in addressing startups," he says when asked if Challenge Up! needs a web-scale partner to lure bright sparks. "We received over 1,000 ideas in the initial phase which confirms that Deutsche Telekom is seen as an attractive partner."
Next page: A symbiotic startup strategy
A symbiotic startup strategy
No doubt, the involvement in Challenge Up! of Intel and Cisco has drawn much of the interest from startups. Each of the program's three sponsors sits in a different part of the value chain, but they have a common objective of fostering IoT development. The opportunity to tap into the expertise of one of the world's biggest telcos, as well as its leading chipmaker and largest maker of IP equipment, will have been a huge pull for the startup community. What remains uncertain is whether Deutsche Telekom, Cisco and Intel will be able to continue collaborating effectively as the ecosystem grows and new business models start to emerge.
Table 1: Challenge Up!'s 12 Winners
||Details of technology
||"Smart pancreas" device measures and maintains a hospitalized diabetic's blood sugar levels in real time
||LED light bulb enhanced by a presence sensor and connectivity
||IoT and M2M interface that provides data gathering, cloud logic, triggers, real-time remote control and analytics features
||App software that "crowd sources" on-street parking vacancy data in using smartphones’ cameras
||Beacons-based technology for cities, public spaces and commercial clients
||Software aimed at allowing production facilities to maximize output and reduce their environmental signature
||Patent-pending technology for building an open ecosystem consisting of smart devices, sensors, mobile software and a cloud platform
||"Smart glove" allowing users to scan handsfree and receive business intelligence information
||Customer analytics-driven IoT cloud-based platform to support EPOS and loyalty programs
||"Universal dial" for the smart home, allowing customers to control various household appliances
||Open platform integrating video analytics, WiFi tracking and beacons in plug and play sensor
|| Real-time automation platform for integrating IoT with enterprise IT systems and online services
From a startup's perspective, Deutsche Telekom has already burnished its partnership credentials through the hub:raum incubator it set up in 2012. Now with facilities in Berlin, Krakow and Tel Aviv, hub:raum has been providing seed funding of up to €300,000 (US$325,000) per startup, as well as mentoring and working space, to young companies that "have the potential to fundamentally transform important markets for Deutsche Telekom." But the operator makes no demands on the intellectual property of the companies it is helping, saying it is crucial that founders retain control of what they have created. Support for Challenge Up! startups is being channeled through hub:raum.
"We can offer a wide range of core competences covering end-to-end service delivery, customer management, go-to-market and associated economies," says Drakopoulos. "This know-how is considered by the startups we partner with to be in important in order to push their services to the market and scale their business."
Indeed, Drakopoulos reckons mentoring is more important than financial support to many startups. Liaison with Deutsche Telekom's sales experts, for instance, has given hub:raum and Challenge Up! companies direct access to the operator's own customers. That process has come with huge benefits for Deutsche Telekom, too. "We had more than 60 mentors assigned to the program and feedback was very positive," said Drakopoulos during a panel discussion at unBound Digital, an event for startups recently hosted in London. "Startups added a lot of value to our own offerings and there was linkage with what mentors were doing in everyday business."
Deutsche Telekom will reach out to a new group of startups when it launches the contest again next year, but its focus is unlikely to change. In the meantime, it will continue to assist the first-round winners in all the ways it can. "Our support will last for as long as it's needed and makes sense," says Drakopoulos.
— Iain Morris, , News Editor, Light Reading